University of Helsinki
Abstract. This paper constructs a political equilibrium in which firms and unions bargain over wages and workers and capitalists lobby the government for taxation, labor market regulation and
immigration policy. The main findings are the following. It is in the workers’ interests to ban firms’ direct recruitment from abroad. Otherwise, the ruling elite captures the surplus of the labor unions by threatening to allow such recruitment. There is an equilibrium level for both legal and illegal immigration and relative union bargaining power. Because unions lobby for illegal rather than legal immigration, the government tolerates a higher public-sector marginal cost for illegal than legal immigrants.
Tapio Palokangas, Luentoja kansantaloustieteen dynaamisista menetelmistä (in Finnish). Opetusmonisteita. Helsingin yliopiston kansantaloustieteen laitos, No. 2: 1999. ISSN 1456-8934, ISBN 951-45-8848-7
Tämä moniste perustuu Helsingin yliopistoissa 1994-95
pitämiini luentoihin. Kysymyksessä oli pakollinen kurssi, jonka opiskelijat normaalisti ottivat kolmantena vuonna sen jälkeen kun he ovat suorittaneet tutkintoon kuuluvat matematiikan opintonsa (15 opintoviikkoa). Monistetta voi käyttää sillä ehdolla että lähde mainitaan.
Monisteen voi imuroida tästä:
(2005) Growth, Trade, and Economic Institutions. Supplement 10 to Journal of Economics (Zeitschrift fur Nationalökonomie). Edited by T. Palokangas, B.S. Jensen, D. Bös, G. Corneo, R. Hjerppe and J. Honkatukia.
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(2005) Common Markets, Economic Growth, and Creative Destruction. Journal of Economics 10. Supplement 1: 57-76.
Abstract. Economic integration is examined in a multi-economy Schumpeterian growth model where economies differ in their research environment, and consequently in the productivity of R&D. It is shown that economies with more or less the same productivity of R&D integrate. In equilibrium, there can be many common markets with different growth rates as well as stagnating economies with decreasing relative income. A small economy with low incentives to save can avoid stagnation, if its R&D is so productive that a common market with a positive growth rate can accept it as a member. Download
(2005) International Labour Union Policy and Growth with Creative Destruction. Review of International Economics 13: 90-105.
Abstract. A multi-economy Schumpeterian growth model is constructed. Economies are interdependent through technology transfer. Households can stay as workers or become researchers at some cost. Workers are employed in production and researchers in R&D. Workers are unionized and union power depends on the government’s protection. The main findings are as follows. If international technological dependence increases, then workers’ wages, the growth rate and the level of welfare fall. The international coordination of labour union policy raises workers’ wages and promotes growth and welfare. DOWNLOAD
(2004) Union-Firm Bargaining, Productivity Improvement and Endogenous Growth. LABOUR: Review of Labour Economics and Industrial Relations. Volume 18: 191-205.
Abstract. This paper presents a growth model with two sectors. In the high-tech sector, R&D increases productivity and union-firm bargaining determines wages, but in the traditional sector there are neither R&D nor labour unions. The government is able to regulate union bargaining power. The main results are as follows. Because firms try to escape wage increases through the improvement of productivity by R&D, the increase of union bargaining power boosts R&D and growth. It is welfare enhancing to strengthen (weaken) unions when the growth rate is below (above) some critical level. A specific rule is presented for when deunionization is socially desirable. DOWNLOAD
(2003) The Political Economy of Collective Bargaining. Labour Economics 10: 253-264.
Abstract. We construct a political equilibrium in which employers and unions bargain over labour contracts, workers and capitalists lobby the government for taxation and labour market regulation and agree ex ante on the type of bargaining. We show that workers and capitalists rule out any bargain over employment, because otherwise the government would capture all the gain. Furthermore, if it is much easier to tax wages than profits, the government protects union power by labour market regulation. In such a case, the political equilibrium is characterized by strong union power and right-to-manage bargaining, which causes involuntary unemployment. DOWNLOAD
(2003) Inflationary Financing of Government Expenditure in an Endogenous Growth Model. German Economic Review 4: 121-137.
Abstract. This paper analyses the role of inflation in economies with endogenous growth and congestion in public services. Optimal policy rules are derived for public services and investment. The other findings are as follows. Monetary policy should maximize economic growth. The more inefficient the public sector is, the higher the growth-maximizing inflation rate is. If a currency union accepts a new member with an inefficient public sector, this will boost inflation in the union and decrease growth and welfare in all member economies of the union. DOWNLOAD
(2000) Labour Unions, Public Policy and Economic Growth. A book published by Cambridge University Press, 237 pages.
Abstract. Collective bargaining is still the main vehicle for labour worldwide to negotiate wages, benefits, retirement policies, training and other terms of working with management in both the public and private sectors. Labour economists have long been active in modelling the relations among collective bargaining agreements, labour markets and social welfare conditions. This book presents a theoretical framework for unions which offers a unified treatment of the centralization bargaining, the credibility of labour contracts, the unionization of labour markets and the relative bargaining power of the union. It assesses the microfoundations of bargaining and examines collective bargaining interacting with public policy, investment and growth, and international trade and specialization. In conclusion Professor Palokangas challenges the commonly held view that collective bargaining has a negative impact on economic welfare, and argues that, with the existence of market failure, collective bargaining can be welfare-enhancing.
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BOOK REVIEWS:
(1997) The Centralization of Wage Bargaining, Investment, and Technological Change. Journal of Institutional and Theoretical Economics (JITE) 153: 657-
Abstract. This paper examines the centralization of collective bargaining where unions are Stackelberg leaders, firms invest in capital and purchase intermediate goods from each other, and where learning-by-investment causes persistent technological change. The main finding is the following. Provided that the elasticity of substitution between labor and intermediate inputs is not very high or very low, bargaining at the central or local level yields higher employment as well as a higher rate of investment and growth than bargaining at the medium level of centralization.